The state reported a total of 1,131 foreclosures. The regions most susceptible are the areas with the highest populations - the Anchorage and Palmer recording districts, according to the March edition of Alaska Economic Trends.

A homeowner uses a big banner to sell his home in this file photo. Despite an increase in foreclosures in 2008, Alaska is the third lowest in the nations for mortgage defaults with 1,131 foreclosures last year. File photo/Rob Stapleton/AJOC

The reasons for the increase in foreclosures are job losses and falling wages, a ripple effect of the Lower 48 economic downturn.

Despite the large increase, however, Alaska has the third-lowest rate nationwide. And it's nowhere near the historic rates seen in the 1980s. In 1988, the state had a record high of 6,821.

The Trends report said that nationally, the foreclosure rate rose by more than 200 percent, according to a survey conducted by the Mortgage Bankers Association.

The U.S. average shows 2.97 percent of loans in foreclosure from 45.5 million loans surveyed by the Mortgage Bankers Association. Nationwide the state with the highest rate of foreclosure using an index of 3.6 million loans is Florida with 7.32 percent, according to the bankers association's survey.

The Alaska market overall seemed to have outperformed the formerly popular sub-prime and adjustable-rate mortgages. These high-risk loans are credited with playing a large role in producing the toxic assets that have nearly toppled the nation's banking system and the world's economy.

"We are very fortunate to be here in Alaska, we have a good story to tell about our situation here compared to Ohio or Michigan," said Paul Kapansky, director of mortgage operations at Alaska Housing and Finance Corp.

AHFC has had only 10 foreclosures so far in 2009. In 2008, the state agency had 75 out of a total of 23,000 home loans developed.

"The market continues to slowly grow at this time," Kapansky said. "The only real difference is that instead of a house being on the market for an average 30 days, houses are now selling more like 70 days."

According to AHFC, annual residential sales activity is declining. The market peaked in 2003, when 3,324 homes sold, but declined 25 percent, to 2,455 homes, in 2008.

Another indicator: residential building permits are down from 1,039 in 2002 to 225 in 2008.

Interest rates are another factor, according to AHFC, with rates as low as those seen in the 1960s. The interest rate for mortgages was has high as 14.9 percent in 1981, and dipped below 6 percent to 5.5 percent in mid 2002, with a current rate hovering around 6 percent. Rates below 6 percent have not been seen since mid-1965, according to AHFC.

Wells Fargo says that so far this year, its foreclosure rate has remained below the industry average. Spokesman Jason Menke would not disclose the Alaska rates, but said nationally, the fourth quarter 2008 rate was 1.41 percent for $1.781 trillion of service volume, compared to the industry's 1.68 percent for the same volume.

Wells Fargo originated 3,500 first-time mortgage loans in Alaska for a value of $816.9 billion in 2008, and 3,800 loans with a value of $870.1 billion in 2007.

The average sale price of an Anchorage home in 2008 sold for $326,000, according to AHFC.

Rob Stapleton can be reached at

rob.stapleton@alaskajournal.com.